Sharron Angle, the Republican senatorial candidate appeared for five minutes as the warm-up act at her own rally last week in Las Vegas. To the joy of the crowd, Angle taunted the Senate majority leader and incumbent, Harry Reid, to "man up" four times, implored her supporters to vote, said she knew "what the American dream looked like" and blew some kisses.

Outside her supporters spoke in apocalyptic terms of the threat that an Obama administration posed to the nation. "He represents everything that is the antithesis of freedom," said one. "He wants to enslave us." Another argued that the president did not understand the "fundamental principles that lead people to live in America. They want to work and don't want things handed to them on a platter." When asked if the president had done anything at all that they approve of, most said no; one said he might provide a good example to black people as to how to create a family.

By this time, Angle had long gone, vacating the stage to Republican grandee Newt Gingrich, leaving by the back door, avoiding the media. She has barely been seen since.

Angle, who has the support of the Tea Party, is in a tight race with Reid. Her bid to oust the most powerful Democrat in the upper chamber has attracted millions of dollars and spawned national news. Her media strategy appears to be to avoid the media. Local reporters have been seen chasing her across car parks; her staffers provide decoys as she slips away. Her schedule is not public. Apart from her television commercials and occasional presence on rightwing radio – which amount to the same thing – she is virtually invisible to the public.

The strategy appears to be working. The less Nevada voters see of Angle the more they seem to like her. In the past week, her lead has grown. The last poll put her ahead by four points. Conversely, the more often she appears in public the more likely she is to say things that her minders have to later explain, deny or parse. Last week, she told a group of Latino students: "Some of you look a little more Asian to me." She has told rape victims that having their baby turned "lemons into lemonade"; that terrorists are coming across the Canadian border; and suggested that two American towns lived under Sharia law.

The story of how such a loose-tongued candidate has come within days of decapitating the Democratic senatorial caucus is, in many ways, the story of these elections. Angle ran as an outsider in the Republican race with Tea Party backing against the establishment favourite, Sue Lowden. Reid prayed for Angle's victory because he believed it would strengthen his chances. The Republicans obliged. But then her candidacy proved to be far more credible to far more of the electorate than the Democrats had bargained for. Although Reid garnered the backing of a range of more mainstream, more high-profile Republicans in the state, precious few Republican voters are following their lead. After 28 years in Washington, Reid is fighting for his political life.

Angle's success is also a tale about Nevada: the state with the highest rates of unemployment and home foreclosures in the nation. For a while Las Vegas was the fastest growing city in the country. People bought houses without deposits, then borrowed heavily on them. Roughly three-quarters of the houses here are now in negative equity. Unfinished homes sit on half-finished streets; gated communities designed to keep undesirables out now keep the desperate in. Last year, for the first time in recent memory, Las Vegas shrank.

The demographic churn explains another reason why Reid is struggling. Nevada, like many south-western states, has a high turnover of population. Roughly 40% of the electorate were not even here in 2004, when Reid was last re-elected. His legacy means little to them.

"If you look at the history of Nevada we have a strong tradition of small government, small spending, libertarian philosophy," explains David Damore, an associate professor at the University of Nevada, Las Vegas. "We don't even have income tax. And in Sharron Angle you have someone who has a history of political activity and was in the Tea Party before there was a Tea Party."

The Tea Party represents little more than a realignment of forces that have dominated rightwing American politics for more than a generation. In 1977, the radical journalist Andrew Kopkind wrote: "There is a great social upheaval at the heart of America that now finds expression in a new constellation of traditionalist, individualist and fundamentalist movements. It feeds the established politicians and practitioners of the right, and it is well fed by them. But to disregard its authentic roots in hometown America is to misread the new national mood, and to become its more vulnerable victim."

Such forces formed the basis of support for Ronald Reagan and George W Bush and of opposition to Bill Clinton and now Barack Obama. Unlike the Clinton years, this time they have an economic crisis to exploit. In Nevada, Republicans have also targeted immigrants and immigration, portraying Latinos as criminals and calling on them not to vote.

Gingrich was in Las Vegas speaking on a "jobs tour". The faithful carried placards calling for "Jobs here, jobs now". From the podium they railed not against welfare cheats and immigrants but bank bailouts and government spending, in particular, and government, in general. Many of the anxieties are real, even if the proposed solutions are deeply flawed.

The contradictions of a movement that both attacks and is funded by big business is not lost on some who describe it as "Astroturf" (fake grassroots). They have a point. A recent attempt by the Washington Post to contact every Tea Party organisation in the country found 70% "had not participated in any political campaigning this year" and many barely existed at all. Last Saturday, a call for patriots to carry out grassroots work in the marginal Democratic district of Henderson, Nevada, fell on deaf ears: no one came.

The Post described the Tea Party as "not so much a movement as a disparate band of vaguely connected gatherings that do surprisingly little to engage in the political process". While Fox News and big business may sustain the Tea Party, they did not invent it and cannot, in themselves, explain how much it has achieved in such a short period of time.

Unlike in 1994, when Gingrich led the last Republican midterm landslide, this most recent rightwing revival has not been for the party establishment but against it. In 1994, the Republicans had a clear set of demands set out in the Contract with America, whereas the Tea Party is an incoherent and inchoate force united more by what it stands against than what it stands for.

Outside an Obama rally in Las Vegas, Sharon Young stands with a placard branding Obama a socialist and a communist. She thinks he's also a Muslim. An Angle supporter, Young is out of work and has no healthcare. So why is she supporting a candidate who wants to get rid of healthcare and stop unemployment benefits?

"To be honest I have not been paying too much attention to the whole 'Obama-care' thing," she says. "He doesn't care about people like me. I have been concentrating on just getting these illegal people out of my country."